Sprint silences another RICO critic

US Unwired sells for a billion

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Sprint has bought out red-state cellular carrier US Unwired for $1.3bn, the plaintiff in an ongoing battle over RICO racketeering charges.

US Unwired serves around half a million customers in its home state of Louisiana, Texas, Mississippi, Tennessee and Alabama. Unlike most of Sprint PCS' affiliates, several of whom have also filed suit against Sprint, US Unwired once operated its own network. Two years ago the carrier called foul, claiming that Sprint had forced it to enter into a number of extortionate agreements, which a judge later described as a "Hobson's Choice". These were conducted with the intention of asset stripping, or "rolling up" US Unwired's business operations, claimed the suit. (US Unwired subsequently sold its spectrum to Cingular).

A court began to hear the case on June 20. Four days later US Unwired filed suit to block the Sprint-Nextel merger, arguing that it was a violation of a no-compete clause in its contract with Sprint.

An AP wire report [example] today records the fact that "as a multiple of the acquired company's operating earnings, Sprint is paying far more for US Unwired than the $35 billion it agreed to pay for Nextel Communications, one of the industry's most profitable companies" but doesn't explain why: making no reference to the RICO case.

According to Sprint today, the takeover agreement puts both cases on hold.

Sprint has succeeded in buying out several prominent affiliates who'd litigated against it, include Ohio's Horizon PCS, which after filing similar RICO charges, was forced into Chapter 11 bankruptcy, and sold to Sprint for $38m in May 2004. ®